The Gartman Letter: Europe, Thursday's U.S. Data And Why Friday's Jobs Report May Be 'Unreliable'

Dennis Gartman, editor and publisher of "The Gartman Letter," commented on some of the top issues affecting the equity and commodities market.

Slower Recovery In Europe

According to Gartman, the European Central Bank's President Mario Draghi's comments indicate a "continued though somewhat weaker" economic recovery while inflation is rising at a slower than expected rate.

Gartman also noted that Draghi made it "abundantly clear" that the ECB is "willing to act in almost any manner necessary if needed" to lower the unemployment rate and move towards the two percent inflation target. Accordingly, the euro "did what it had no choice to do" and "it sank immediately and materially."

Related Link: More ECB Stimulus On The Way?

Thursday's U.S. Data

Switching to North America, Gartman pointed out that Thursday's Labor Department reading that initial jobless claims rose 12,000 to 282,000 was "a bit" above the Street's expectations. He continued that the four-week moving average rose 3,250 to 275,000 and that unless the weekly claims read above 285,000, "we were not going to pay a great deal of heed."

The Institute for Supply Management's index of the service sector activity fell from its peak of 60.3 in July to 59 in August, which as "marginally" above the Street's expectations and contained "no surprises."

Moving on to the Commerce Department's report, which showed the trade deficit falling 7.4 percent to $41.9 billion in July, Gartman stated "we yawned," as the report was "that boring."

Friday's Job Report

Finally, Gartman discussed Friday's jobs report, noting that August's reading "is the singularly most unreliable" month of the year for the Employment Situation Report. He cited a research paper by Harm Bandholz, the chief U.S. economist at Unicredit in New York who found the average revision to the August number is an increase of 90,000 to the upside.

Gartman noted that August's data may be unreliable perhaps due to changes in recent years over the auto production cycle. However, he did note that while he is paying attention to the headline numbers, he is paying "even greater heed" to the average hourly earnings number, which grew last by 0.2 percent. An increase of 0.3 percent or higher would "raise the odds" of a lift-off in rates.

"Caveat then emptor," he concluded.

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